In the coming months, many marketers will be involved in some rather difficult conversations with their financial director. Difficult because there is, historically, a tendency for marketing to be one of the first types of spend to be culled during a downturn.
Yet since the last recession, which the UK officially exited in 1992, the marketing landscape has changed profoundly. The arrival of digital techniques has given marketers far greater measurability, and tools such as web analytics are – in theory – making such negotiations much easier.
So, are marketers, with digital metrics at their disposal, now better placed to negotiate the budget they require to execute their plans? And, if so, where does this leave offline marketing activities? Is it a case of ‘what can’t be measured can’t be funded’?
1. Time to think about budgets
Before addressing the digital debate, let’s think about the issue of timing. Dr Paul Baines, reader in marketing at Cranfield School of Management, believes this to be key, with companies often setting out their budgets on-the-hoof rather than taking time to carefully consider their requirements.
Putting together a proper budget takes intensive research, he says. Some element of the budgeting process needs to be taking place six months in advance and there should always be a contingency plan of around ten per cent. The message is clear: with marketers chasing funds for the new tax year, now is the time to start getting a water-tight case down on paper.
But how much should you plan for? The general consensus here was that a year’s worth of activity should be budgeted for. However, Mark Stuart, head of research at the Chartered Institute of Marketing, suggests some funds should be held back so the budget can react to external events marketers cannot predict.
This idea might not sit easily with some marketers but Stuart is quick to point out that this doesn’t mean they may lose unspent money. If you have a clear rationale for why you are holding it back, the financial director is more likely to trust you and respect your prudence, he says.
2. The negotiation process
Negotiating your corner with the FD or board is a skill in itself. Many marketers may view such a process with trepidation, although Stuart suggests this needn’t be the case as long as they talk the same language. Marketers must have a good financial grasp and ensure that anything they present is accountable, builds in appropriate metrics and demonstrates return on investment, he says.
There are simple steps marketers can take here. Numerous financial training courses are available for non-financial people, with the CIM’s own course in this area proving increasingly popular. If you, as a marketer, have at least some form of financial training then the financial director is far more likely to trust you, adds Stuart.
There are other tactics marketers can use to press their case. Mark Power is a member of the IDM B2B Council working party and CEO of Concep. For him, a powerful way to put forward a convincing case for funds is through greater collaboration between marketers and suppliers of technology.
Marketing people need to bring in suppliers and get them talking to senior people, Power says. By getting the supplier into the room they can show the benefits and illustrate first hand exactly how the budget will be used.
One final point on negotiating funds is the idea of joint activities. Stuart suggests that these, especially between sales and marketing, often make for a compelling proposition. Something like pricing can be dynamically tailored if sales and marketing work together, he says.
3. Accountability
There is an obvious temptation in the current climate to move towards digital due to its ease of measurability which, in theory, enables a far more concrete case to be put to financial directors. Yet experts warn of the perils of allocating huge spends to things like demand generation technology, whilst leaving little budgetary allocation for the underlying strategy.
Neil Fox, a business strategist at TDA, believes that marketers need to think very carefully before abandoning the offline budget altogether. It is easy to see digital as the panacea, however, there are issues digital doesn’t cover, he says. For instance, if you want to drive huge volumes of traffic you can’t do that through a pure online strategy. Much of the time, offline channels remain the most effective acquisition tools and play a valuable role signposting existing and potential customers online.
4. Operating on a shoestring
While arguing a solid case for marketing funds is all well and good, in many instances the money simply won’t be there. So what can you do if your marketing budget is slashed? Fox suggests that a great starting point is your existing client database. You need to begin using your existing customers as a marketing database, as that is essentially what they are, he says.
Such sentiments tie in with the popular marketing adage that it costs five times more to win a new client than retain an existing one. Fox suggests a marketing campaign with existing clients needn’t cost a great deal as often it can be piggy-backed onto existing marketing formats such as newsletters. These can then be followed up with, for example, an email shot.
Also invaluable when funds are tight is the ability to make existing marketing tools work harder and more efficiently, websites being a prime example. Gemma Barnard, operations director at Minute Steak, suggests now could be a good time to ensure that websites are being fully optimised, with data being properly tracked and any irrelevant, non-value-adding activity being stamped out.
Likewise, a micro-site can be a highly cost effective focal point for a B2B campaign given that it will, in most cases, be duplicating a lot of information from an existing website while also benefiting from the SEO properties of that site.
Mark Power also believes that reduced marketing budgets needn’t be the end of the world. If all else fails, go old school, he says. Simple, well targeted letters followed up with a call can be really effective. There are no excuses for marketers not to have anything to do.
There is also, of course, social networking. Tim Gibbon, director of Elemental Communications, points to the vast array of social and business networking sites which offer numerous opportunities, but sounds a note of caution: If you want to start measuring these activities, the software is available but it is quite expensive to build in metrics etc.
5. And one final thing…
Still struggling to bring the FD round to your way of thinking? Perhaps it’s worth pointing out the following: Tony Hillier’s analysis of 1000 companies from the PIMS database after the 1990/91 recession found that companies increasing marketing spend during a recession recover three times faster.
There is plenty more research to support this general finding, which is why it’s hard not to argue with the concluding sentiments of Power. He says, This is the time for marketers to battle for their budget. They need to fight their corner. Marketing is about risk and now is the time to take it.
